Academic journal article Journal of Business and Entrepreneurship

Awareness of Export Assistance Programs among Minority-Owned Small Businesses: An Empirical Study

Academic journal article Journal of Business and Entrepreneurship

Awareness of Export Assistance Programs among Minority-Owned Small Businesses: An Empirical Study

Article excerpt

ABSTRACT

The purpose of this study was to determine the extent to which minority-owned small businesses are aware of the various programs, services, and/or agencies that have been established by the federal and state governments to assist American firms in their efforts to initiate or expand their foreign trade involvement. It was found that the awareness among minority-owned small firms regarding existence of such programs is a function of the extent of their current involvement in exportation. Active exporters, as a group, tend to be more aware of existence of various governmental assistance services than are marginal exporters and non-exporters. Likewise, study results indicated that export related information/assistance needs of minority-owned small firms also tend to vary with their current levels of export activity. Implications of the above findings were discussed.

INTRODUCTION

In 1970, export sales accounted for only 4.3% of the United States GNP. By 1988, export share of the GNP had more than doubled, climbing to 9.5% Gain, 1990). Also, U.S. exports doubled since 1985 to $422 billion in 1991, accounting for much of the country's economic growth between those years (Moore, 1991). Despite these positive trends, the ratio of U.S. exports to GNP is far below that of the country's major rivals in the global economy. For example, for the United Kingdom and Germany exports amount to approximately 20% of GNP.

It is also important to note that relatively few large multinational companies account for a disproportionately large share of U.S. export revenues. For instance, in 1988 approximately one percent of all U.S. companies were responsible for 86% of the country's exports (Ali & Swiercz, 1991). Contrary to Europe and the Far East where small companies have regularly participated in export markets, in the United States relatively few small and medium-sized firms actively export. Small businesses manage only about 10% of total VS. exports, and among those that do export, foreign sales represent less than 10% of total revenues (Kathawala, Judd, Monipallil, & Weinrich, 1989). These statistics seem to indicate that there must be an enormous untapped economic opportunity and growth potential in the area of international trade, especially for small U.S. firms. The questions thus become (a) why are more firms not pursuing these opportunities, and (b) what can be done to encourage and/or assist small firms to take a more aggressive approach to export sales.

In recent years, U.S. small businesses have been the leaders in economic growth and job creation. Firms employing 500 or fewer workers "...accounted for 3.2 million new jobs between 1988 and 1990, when big businesses had a net loss of 500,000 jobs" (Business Week, 1993, p. 114). Further, more than 36 million Americans are employed by businesses with fewer than 100 employees. It also appears that the significant economic role of small business is not likely to decline in the near future According to the U.S. Small Business Administration, smallbusiness-dominated industries will contribute approximately 68% of all 25 million new nonfarm jobs created between 1992 and 2005. This represents a projected increase of 32.1% as compared to the 24.3% expected increase associated with the country's total employment (The Small Business Advocate, 1994).

Given the crucial role that small firms play in the vitality of the U.S. economy, identifying and reducing the factors that cause firms to display a lack of enthusiasm for exportation may have significant consequences at the national level. Efforts to increase export revenues of small businesses not only could bolster their own growth and prosperity, but also would create new employment opportunities for the American worker, help reduce the U.S. trade deficit, increase the tax base at all levels of government and, consequently, improve the social and economic welfare of the entire nation. …

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